Motor-valuations system a tiresome bother to insurer
Published:Sunday | March 6, 2011 | 12:00 AM
Insurance Helpline with Cedric Stephens
Question: It is now near the time when I spend a day and more money than I earn on the chore of renewing my car insurance. The process begins with the call to my broker to find out which valuator to use. Next is a 40-kilometre drive. The valuator checks this and that and goes through a long list. Most of the items have little to do with the value of the vehicle. The inevitable long wait follows while the report is being typed. Many valuators have no clue about the condition of the things on the list as the vehicle is not road tested. A valuation fee is then paid. Last year it was $1,800. Off you go to the broker for another set of 'milking' in terms of additional fees, and the ultimate one, the premium.
I have never encountered anything similar anywhere else in the world. If the authorities say the car is roadworthy, shouldn't that be good enough? Why not follow the European practice and have a brief visual inspection carried out by the agent and then set a value from a catalogue such as the UK's Glass Guide? Should consumers pay for these inefficiencies?
HELPLINE: In 2009 I wrote two articles: "Want to challenge estimate of value? Forget it!" on February 22, and "Problems with corruption" on March 15. They are germane to the questions that you posed. The first said that damage claims to vehicles that are insured under comprehensive policies are settled based on the insured's estimate of value. I also argued that most problems between the insurer and the insured when it comes to what and how much insurers will pay is due usually to differences of opinions between the insured and the insurer about value.
The second article stated something that most persons who operate vehicles know: all is not well with the system of issuing certificates of roadworthiness or 'fitness'. It is suffering from an acute case of corruption. Island Traffic Authority head, Paul Clemetson, was quoted as saying that "too many vehicles have been observed with defects having been relatively recently been issued with certificates of fitness".
I referred your comments to one of my friends, who, I must admit, operates a company that among other things, conducts motor vehicle valuations. He, in turn, sent them to the president of the Loss Adjusters Association of Jamaica (LAAJ), David Kay. The LAAJ head's four-point response is excerpted below.
1) The 'long list' of items that the valuator goes through has everything to do with determining market value. The make, model, trim level, accessories fitted, engine size, transmission type, and correct model year are just a few of the items which directly influence the market value. The condition of the body, interior fittings, and mechanical components also affect market value. Valuators are trained to recognise mechanical and cosmetic defects and how these may affect roadworthiness or value all vehicles as either yard tested or road tested where possible to determine if all systems (mechanical or otherwise) are in proper operating condition.
2) Most valuators recognise the wait that their clients may endure for reports to be processed. Some amount of research has to be done to verify an accurate 'top-' market value and necessary deductions made for condition. With the technology, valuators have the option to have their clients leave immediately after the vehicle is inspected, and have the completed report emailed directly to their insurance company and also to the client if they have access to electronic mail.
3) Valuation fees may vary depending on the valuation company that you use, but these fees are usually very reasonable based on the detailed reports produced and the time and effort expended on each report.
4) The inspection done by the Island Traffic Authority serves its purpose, but does not provide all the information required by an insurer to properly underwrite a motor-vehicle risk. Reasons for this are as follows:
a) When offering comprehensive cover, an insurer would need to know the current market value of the vehicle in order to calculate premiums. The market values of motor vehicles in Jamaica tend to fluctuate due to various factors. The practice of using a value guide to determine market value in the United Kingdom and United States is made simpler due to the stability of certain factors influencing value, which does not necessarily hold true in Jamaica. There is currently no such value guide available for the Jamaican motor-vehicle market.
b) An insurance agent would not normally have the training required to properly inspect and value a motor vehicle.
c) As required by the insurer, the valuator is obligated to verify the correct model year of the vehicle, which sometimes differs from the registered year of the vehicle.
d) Evidence of any prior repairs or existing damage to the motor vehicle is noted in the report, and places the insurer in a position to decide whether or not they want to accept the risk. As required by the insurer, photographs of the vehicle are taken and submitted along with the report.
e) The country of origin of the vehicle is noted in the report, along with remarks regarding the availability of spare parts and servicing facilities for that unit. Any modifications to manufacturers' specifications, conversions, or upgrades to the vehicle are noted by the valuator. This is all critical information for insurance underwriters when calculating premiums.
f) The tyre tread depth is measured using a tread-depth gauge. This allows the insurer to decide whether a tyre that is worn just above the lower limit should be replaced before issuing a policy.
I hope that you now see the links between renewing your policy, the issuing of certificates of fitness and corruption in the society, and the process of getting a valuation. Is there a better way? You decide.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233